I've gotten just about everything on Craigslist, but I find it's better to find vacation rentals/apartments via sites that specialize in them for each city. For instance, for my recent Barcelona stay, I got a great apartment in the Barri Gotíc for relatively cheap via http://www.friendlyrentals.com/
Do a Google search for the city name and apartments, and the first hits are usually vacation rentals. While I usually prefer the hostel route, this is a good way to do it if you're in a larger group. The downside is you don't meet as many random people, but it's definitely nice overall.